5 Steps for Creating Your Indigenous Procurement Policy

Engaging with Indigenous-owned enterprises is a key part of building your supplier diversity. Not only is it beneficial for your organisation, it helps an important community develop economically and gain more independence.

For it to be done sustainably, you have to develop your own Indigenous Procurement Policy (IPP). In this blog, we’ll look at the benefits of supplier diversity, what an IPP actually covers and how you can craft your own.

What is an Indigenous-owned enterprise?

An indigenous-owned enterprise is a business that is owned and operated by Indigenous people. They can take various forms, including sole proprietorships, partnerships, corporations, cooperatives, and not-for-profit organisations.

These enterprises operate in a wide range of industries, such as agriculture, forestry, fishing, tourism, arts and crafts, and technology.

Indigenous-owned enterprises can be an important vehicle for economic development and self-determination for Indigenous communities. By owning and operating their own businesses, Indigenous peoples can create jobs and generate wealth in their communities while also preserving and promoting their cultural traditions and practices. Social procurement policies can also help to build stronger relationships between Indigenous and non-Indigenous peoples by fostering greater understanding and appreciation of Indigenous cultures and ways of life.

5 reasons why supplier diversity is important

  • Inclusion and Equity: Supplier diversity helps to create a more inclusive and equitable business environment by providing opportunities for businesses from underrepresented communities to participate in the economy.

  • Innovation: Diverse suppliers bring different perspectives and experiences, which can lead to innovative solutions and approaches to business challenges. They are typically more agile than bigger corporations, too, making them better equipped to respond to short-notice requests.

  • Customer Expectations: Many customers and stakeholders expect the companies they do business with to be committed to diversity and inclusion. Supplier diversity can help to meet these expectations and build customer and stakeholder loyalty.

  • Economic Benefits: Supporting diverse suppliers can help to stimulate economic growth in underrepresented communities and contribute to the economy’s overall health.

  • Competitive Advantage: Companies with diverse supply chains may have a competitive advantage over those without, as they will be positioned to respond to changing market conditions and customer demands.

What is an Indigenous Procurement Policy?

An Indigenous Procurement Policy (IPP) is a policy that aims to increase the participation of Indigenous-owned businesses in an organisation’s procurement processes. The policy typically sets targets to award a certain percentage of their contracts to Indigenous-owned businesses.

The specific details of an IPP can vary though they typically include measures such as:

  • Setting targets for the percentage of contracts that are to be awarded to Indigenous-owned businesses.

  • Simplifying the procurement process, making it easier for Indigenous-owned businesses to bid on contracts.

  • Providing support to Indigenous-owned businesses to help them grow and develop, including business training, mentoring, and access to financing.

  • Monitoring the implementation of the IPP and report on progress towards meeting procurement targets.

What should government departments & agencies do?

The Commonwealth has laid out an Indigenous Procurement Policy for all non-Corporate Commonwealth entities to follow. It’s optional, but strongly encouraged. Given the nature of procurement, the Commonwealth IPP is more like a template that individual agencies may need to modify to be consistent with their procurement documentation. 

For private enterprise, an IPP will need to be developed in-house. Let’s take a look at the major considerations, which government entities will also find useful when performing their own modifications on the Commonwealth IPP.

How to create your own Indigenous Procurement Policy

  • Set targets

Figure out what’s realistic for your organisation when engaging with Indigenous-owned enterprises. As we’ve discussed, the benefits of supplier diversity are profound, but it has to be done right, and you don’t want to over-extend. What percentage of contracts will you award to Indigenous-owned enterprises? Your size, industry and procurement needs are key considerations.

  • Build relationships & seek input

Establish relationships with relevant Indigenous-owned enterprises, as well as their communities. Join relevant business groups, attend Indigenous business events, get to know the organisations of interest to you, the people to approach, and start building these key relationships. Theses stakeholders will have some of the best advice for how an IPP should look.

  • Simplify and be approachable

Most traditional procurement processes are difficult for minority-owned businesses to navigate. These businesses typically have less capital to call upon and often have less experience than larger corporations. Review your processes, identify any potential barriers and remove them.

  • Provide support

Are you in a position to provide support? This may look like mentorship, training, even financing. The stronger Indigenous-owned enterprises that you work with are, the better they’ll be as strategic partners and diverse suppliers. It’s an investment that may take some initial input from you.

  • Monitor and report

As you well know, in procurement, if it can’t be reported on, it never happened. Monitor your activity with Indigenous-owned enterprises so you can determine how effective your policy is, identify any issues and address them. There’s no point in having targets if you’re not tracking them. Stakeholders will also expect progress reports, and consumers will demand evidence of your ESG claims.

We can help you develop your Indigenous Procurement Policy

Much of how you develop your IPP depends on your size, the industry you’re in and the particular needs of your organisation. We’ve helped many businesses from many different industries develop their own IPP. We have unique insights into the process and we know what works and where the pitfalls are. Give us a call today and start building the diversity of your supply chain sustainably.